Socially Awkward Teens May Drive Mobile Payment Adoption

One big knock against mobile payments is that the technology is trying to solve a problem that doesn’t exist.

Critics suggest that using a credit card at the register is not much harder than using a phone enabled with near field communication. But if you are having a hard time understanding, maybe it’s because you are getting too old (sorry if I’m the one breaking it to you).

In an interview, David Messenger, American Express’s head of online and mobile, tells me they have identified a major pain point among teens and others who are still using cash and checks to conduct a majority of their transactions.

Dozens of companies are rushing into the space, including eBay-owned PayPal, American Express, Google, Visa, Mastercard and start-ups, too, like Square and others, but it’s not clear how quickly consumers will find reasons to use new payment technologies.

“The key thing that we’ve found resonates is the social aspects,” Messenger said. “This is about new growth opportunities and people who use cash and checks. … It’s the social experiences that don’t have great solutions. It’s awkward.”

Messenger also sat on panel yesterday at Mobile Future Forward in Seattle to discuss the topic with other executives from Google, Walmart, T-Mobile USA and OpenMarket.

The conversation got heated when a woman raised her hand to say she didn’t understand why she would ever adopt mobile payments: Seriously, how could a phone be easier than swiping a card?

Walmart’s SVP of online and mobile, Gibu Thomas, explained that the discount retail conglomerate would never pressure users to adopt it, while T-Mobile Chief Strategy Officer Peter Ewens defended the technology by saying that it improved security.

But Messenger said in an interview to me that the bigger opportunity is in the international markets, and for now it’s focused on teenagers in North America, who struggle in social settings.

He said the benefits are obvious when splitting a check at a restaurant, divvying up rent and utilities among five roommates every month, or being the person who fronts the money to buy tickets to a concert for a group of 10. Those transactions today are largely conducted with cash and checks.

Earlier this year, American Express unveiled a new business called Serve that competes with PayPal and other emerging payment platforms. It lets consumers make purchases at retail, withdraw cash from ATMs and make person-to-person payments from their computer or their phone.

Serve recently inked a deal with Ticketmaster to be integrated into the check-out process. People frequently abandon the purchase at the check-out in fear that their friends won’t repay them the hundreds of dollars owed for a concert or sports event.

Once Serve is integrated, he said, Ticketmaster will hold the tickets for a certain period of time and send an email to friends, alerting them to pay directly for the ticket. At that point, it’s simple: If they don’t pay, they won’t go.

American Express is also experimenting with using social networks by creating a Facebook application called “Pay Me Fool,” which uses humor as a way to make it more comfortable for someone to bug a friend to pay them back for beers last weekend.

For now, Serve mostly works as a prepaid card, but in the future, the platform could be used in conjunction with NFC or other emerging technologies. Messenger said they aren’t ruling anything out and are trying to be as open as possible.

The card can even be topped off with a Visa or Mastercard.

But right now, Messenger and the other participants on yesterday’s panel agreed on one thing: NFC is still about three years away from hitting the mainstream. It will take a while for users to get NFC-enabled phones and for retailers to have NFC-enabled payment terminals.

“NFC gets a disproportionate amount of attention,” said Messenger, who attributed the fixation to our “gadget-driven culture.”

A look into his wallet suggests how far the industry is from any major changes. Messenger’s thick leather wallet contained cash, a Connecticut driver’s license, 10 loyalty cards and five credit cards, including two from American Express, one from Serve and two from Mastercard.

However, I’ve found that asking mobile payment executives what is in their wallet is far from a window into the future.

Messenger said most importantly, the prepaid product addresses a whole new segment of the population that its corporate-heavy image would not normally attract. He hopes new types of commerce models will flip its business upside down.

For example, today, Amex markets heavily to acquire new customers and then keeps existing users happy by offering them rewards. He suggests that Serve will make it much easier to acquire new customers because of partnerships, such as the deal with Ticketmaster or another deal it has with Verizon Wireless. From there, he said, they will have to keep giving Serve users reasons to come back.

I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

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